Q&A: Bill Harris
The former CEO of PayPal and Intuit, Bill Harris has helped create and popularize several well-known financial tools. Now he’s investing $2 million of his own money and has raised $25 million more to start Personal Capital, a wealth management firm of which Harris is CEO. Personal Capital will serve clients over the phone and online, from an app to a website to instant messaging and FaceTime. Harris thinks clients are ready for it—even if the industry isn’t.
Q: Why start Personal Capital?
I’ve spent 25 years doing financial technology and been part of teams that have built some great products, from TurboTax to Quicken to PayPal. But the great products that we built have not really made the financial life of the American household substantially better.
Fragmentation. An affluent household in this country will have at least 10, maybe 20 different financial institution relationships—it’s a mess.
And the consequences of that disorder?
If you don’t have the ability to fundamentally see all [your finances], there’s no way that you will ever develop a financial plan.
So what does Personal Capital do?
We are a digital wealth management service with two elements. The first is a free service that gives people access to data aggregation, net worth and asset allocation tools. We also manage money as a traditional advisor would.
What do you charge to manage money?
It is always less than one percent [of AUM].
What’s the minimum asset level for clients of the financial management services?
$100,000, which is quite low—the automation allows us to provide advice economically. But we also handle clients with tens of millions.
If your clients only meet with advisors digitally, how do they actually pick an advisor?
We make the initial introduction. Our advisors are full-time, salaried employees who know our technology and have been trained in our philosophy.
How many advisors do you have?
The entire company is 50 people today: 30 in engineering, 10 overhead, 10 advisors. The advisor category will grow substantially as our business grows.
What’s the advantage of Personal Capital?
Traditional wealth management is almost a parent-child relationship. You walk in, it’s a mahogany desk, the fellow is gray at the temples, and you say, “Here is my money.” And he pats you on the head and says, “Of course, young man, we’ll manage it for you.”
I believe that increasingly there is a large percentage of people with complex finances and large asset bases who do not want that kind of parental model. They want to know exactly what’s going on, and they want to know it instantly.
Aren’t some people wedded to the idea of meeting in person?
I think ours is in every way the superior model with the singular exception that, as humans, we do like to be able to look somebody in the eye. For clients who want to do that, our model will not be appropriate.
What feedback have you gotten from traditional advisors?
Two different reactions. One is, “That will never work. Listen, young man, I have been doing this for 40 years, and I know what my clients want, and there’s no way they’re going to trust an advisor who lives halfway across the country.” The other is, “Oh, cool. This is what we should be doing. And by the way, can I use your tools in my own practice?”